A Compliance Officers Guide to Mitigating Stark Risks

Presented by:Steve Ortquist

Vice President Chief Compliance Officer

Dwight ClaustreHealthcare Compliance Professional

2

OBJECTIVES

• Understanding: What every compliance professional should know about Stark and how it can affect your organization.

• Risk/Reward: Making it beneficial for leadership to focus on Stark compliance.

• Process: What processes can be implemented within your facility to mitigate the risk of a Stark violation.

• Investigation: What to do if it slips through the cracks.• Education: Who, What and How.

3

BOTTOM LINE

NO SERVICE

NO CONTRACT

4

WHY

• Condell Medical Center (IL), 2008 - $36 million– Physician arrangements

• Leases of medical office space at rates below fair market value

• Improper loans to physicians

• Hospital reimbursement to doctors who performed patient services without required written agreements

– Self-reported

5

WHY

• U.S. ex rel. Moilan v. McAllen Hospitals (S.D. Texas 10/30/09)

– $27.5 Million settlement for FCA, AKS and Stark violations

– Between 1999-2006, alleged sham medical directorships and leases with referring physicians

– $5.5 Million to the whistle-blower (former director of managed care)

6

WHY

• U.S. ex rel. Reimche v. Tulare Local Healthcare District (C.D. Cal. 7/27/09)

– Between 2001-2007, physicians had < FMV leases, purchased real estate at < FMV, and had debts forgiven

– $2.4 Million settlement for FCA, AKS and Stark violations

– Former CFO was the whistle blower

7

WHY

• Detroit Medical Center (12/30/10)

– $30 Million settlement for FCA, AKS and Stark violations

– Focus on Stark: > FMV physicians compensation, and leases not in writing, unsigned physician contracts, and physician perks (e.g., sports tickets) > $359/year limit

– Substantial penalties for “technical” Stark violations

– Detroit Medical Center voluntarily disclosed physician relationships

8

SO…WHAT DOES THIS MEAN

9

TOP EXCUSES

• We’ve always done it this way.

• The physician already has a contract for X services, so I figured I could pay him for Y services based on that.

• I assumed the old contract was still OK.

• We had to get it done no matter what just to keep the physician happy or he would walk.

• Other hospitals don’t make this physician sign a contract to provide these services.

• I can’t tell Legal what to draft because I’m not sure why we’re paying the physician.

• He is a physician who has saved lives for 20+ years here at ____, it is disrespectful to ask him to sign a piece of paper.

• It was just a simple deal.

10

STARK OVERVIEW

Test your Stark knowledge:– Start with presumption that we CANNOT give or pay anything

of economic value to a physician or her family member. If we do, we cannot bill Medicare for services ordered by the physician.

– Next: we might be able to rebut that presumption by fitting in a Stark exception.

– There is NO guarantee that one is available.

– Lack of bad intent is IRRELEVANT.

11

STARK REACHES VIRTUALLY ALL PHYSICIAN TRANSACTIONS

Financial RelationshipOwnership and compensationrelationship broadly defined

•employee•employer•partner•investor•contractor•lessor/lessee•medical director•gifts, honoraria, discounts•perks, (parking, food, etc.)

12

STARK REACHES MOST PHYSICIAN FAMILY MEMBERS TOO

• husband or wife• birth or adoptive parent• birth or adoptive child• birth or adoptive sibling• stepparent• stepchild• stepbrother / stepsister• father/mother-in-law

• father/mother-in-law• son/daughter-in-law• brother/sister-in-law• grandparent• grandchild• spouse of a grandparent• spouse of a grandchild

13

STARK EXCEPTIONS FREQUENTLY USED

• Medical Staff Incidental Benefits

• Non-monetary Compensation

• Personal services

• Office space/equipment rental

• Physician recruitment agreements

• Employment

14

STARK TRAPS

• Stark reaches most all hospital/physician relationships • Requires “perfect” compliance• Consequences disproportionate to harm• The more important the physician/group, the bigger

the risk• Watch out for physician-owned entities (equipment

leases, device companies)• Indirect compensation and the indirect compensation

exception

15

STARK TRAPS: NON-MONETARY COMPENSATION

Non-monetary Compensation is defined as items or services, not including cash or cash equivalents, provided by the organization to a Physician (or an immediate family member) with a value of up to $359 for calendar year 2011.

16

STARK TRAPS: NON-MONETARY COMPENSATION

• Social dinners

• Paying the greens or entry fees for golf, tennis or similar events

• Providing tickets for sporting, theatrical, concert, social or similar events

• Providing flowers or gifts for any reason during hospitalization or to recognize a birthday or other life event

• Any type of non-monetary gift not already listed: MugsNote-padsPensWineetc.

17

TRACKING

What happens if we exceed the $359 during the year?

150%=538.50• We may not be able to bill Medicare for services ordered by the

physician.

• We may have to go back to the physician and ask him or her to repay a portion.

• Possible false claims act violation.

18

TRACKING

• Spread Sheet (Excel)• Commercial Product• Monthly Email• Audit Expense Accounts• Report to Compliance Committee

19

KEYS TO COMPLIANCE

• Commitment of governance and senior management to compliance with physician transactions

• Structure and processes that create effective internal controls Legal review of all physician contracts Centralized physician contract approval process A/P check prior to payment

• Regular auditing and monitoring and enhancement of existing physician transaction process

20

KEYS TO COMPLIANCE

• Update agreements if services, space or compensation changes

• Regularly review MD contracts for Stark and AKS compliance

• Develop policies and procedures to timely report and refund identified over payments because of physician transaction issues

21

COMPLIANCE REVIEW

• Medical Director Agreements

• Call Coverage

• Payments for Hospital Committees such as EHR, IRB, etc.

• Preceptor Agreements for Residents

• Leasing Agreements

• Physician Services

• Income Guarantees

• Indigent Care Payments

• Honorarium

• Staff/Support Agreement

• Medical Staff Leadership

• Laser Rental

22

COMPLIANCE REVIEW

• Review Accounts Payable for payments to physicians

• Review Accounts Receivable for payments from physicians

• Review payroll for payments to physicians

• Comparison of payment with contract and supporting documentation

• Review contracts/leases to ensure they are up to date and payments are correct

23

EDUCATION

Management

– Responsible for contracts– Responsible for all check requests– Must understand their contracts– Gift givers– Responsible for tracking against any caps

24

OPERATIONALIZING STARK COMPLIANCE

• Front to back end control

• No work without signed contract

• All signatures and dates

• 60, 90, 120 day reports

• Payment processing

• Supporting documentation

25

OPERATIONALIZING STARK COMPLIANCE

Develop Specific Check Request Forms for Physician Payments

– Accounts Payable– Time Sheet– Payroll– Call Schedules

26

OOPS

• Investigation– Work with Counsel– Interview Knowledgeable Persons– Gather and Sequester Documents– Determine Payments Made Without Contract– Determine Overpayments from Medicare– REFUND 60 Days after IDENTIFIED– Disclosure (OIG or CMS)?????– Who, What, When, Why, How

27

QUESTIONS